As we likely all know, U.S. workers have not been enjoying much in the way of rising wages for some time. The economy’s health as far as bringing workers ever increasing prosperity is a function of ever increasing worker productivity.

Labor productivity is defined as the amount of output produced per hour of labor. Productivity is affected by new technology, capital investment, the organization of production, managerial skill, and the characteristics and effort of the work force. The more you produce per hour the more your employer profits. The employer hopefully shares the profits of your labor with you, the worker, through higher wages.

But productivity growth has been lagging. During America’s post World War II boom years of 1947 through 1973, productivity enjoyed a 2.8% annual growth rate. This sharply contrasts with 2007 through 2015 when productivity grew just 1.2% per year, a drop of almost 60%.

So why is productivity not increasing faster?

First of all, we’re all busier than ever but are we getting more work done? The problem is the things we’re busy at are not necessarily resulting in higher productivity. For example, just think about how much time you spend cleaning up your email box every day. Sure, email has made communication more efficient, but has it made it more effective? We don’t have to play phone tag so much anymore, but email has also brought us spam. But it’s not just email. Think how Facebook and Twitter and Snap Chat and Instagram and Youtube, etc., all take their toll on productivity.

Economists are arguing over whether succeeding waves of new technology necessarily deliver less and less in the way of productivity gains. I’d argue that some technology gains deliver productivity loss.

Second, the gig economy and the celebration of entrepreneurship means many workers, and in particular millennials, are working on their own projects even if they have a fulltime job, and often while they’re at that fulltime job. As a manager I’m astounded at how much time millennials at work spend not working on their employer’s agenda, but rather on their own. In a discussion with a high level corporate executive, he told me that their company was formulating a policy that their workers would be required to spend at least 75% of their time on the job working on the employer’s assigned tasks, allowing them to work 25% of the time on their own projects. Say what? His rationale was that their millennial workers would just quit otherwise. This is a clear case of corporate insanity sabotaging the company’s own productivity growth.

Finally, the baby boomers aren’t capable of delivering strong productivity growth. Research shows that worker productivity slows down after age 45, at least in some industries. Forty-five plus old individuals make up about 44% of all employed workers, and of course most of these are baby boomers, the youngest of whom are now 53 years old. I’m not saying baby boomers don’t contribute. Science says our analytical skills continue to develop as we age, even if our memories degrade. But baby boomers are not going to be delivering the productivity gains needed to fuel significantly growing worker incomes.

The best hope is the millennial generation, which is even larger than the baby boom. But unless they get focused on being more productive for their employers than they have been we may have many more years of sub-standard productivity and wages.

About The Author

Jim Robinson

Jim Robinson holds an MBA from the University of California, Berkeley and has extensive management and consulting experience. He managed a team with worldwide product, sales and support responsibilities at AMF before becoming an independent business consultant in 1996. Along with David Propis, he co-founded Hire-Intelligence, LLC in 2011 and today serves as CEO of the company.